Nigeria Needs Economic Prosperity For Insurance Industry To Thrive -Lawal | Independent Newspapers Limited
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Nigeria Needs Economic Prosperity For Insurance Industry To Thrive -Lawal

Posted: Jul 5, 2015 at 12:35 am   /   by   /   comments (0)

The Managing Director/CEO of Sterling Assurance Ltd, Mr Fatai Lawal in this exclusive interview with Magnus Ugwubujor, insist that the gains of the Insurance Business in Nigeria have really not been fully harnessed. Excerpt.

How did you get into the insurance business?

I have been in the insurance industry for a reasonable length of time. I have spent the whole of my life and career in insurance. I started insurance as a qualified chartered insurer 1984; it’s been 32 years now. I actually studied insurance in the university. I chose Insurance as a course of study in my A level in 1980. Just by coincidence; by mere intuition while all my colleagues were rushing into accounting, finance; I just felt insurance looked new. Looked like something that is not known and I said if I go into this area I could rise. And I think that goal was achieved very early in my career.

You have been in the Insurance business for long, what would you consider your lows and highs?

Mr Fatai Lawal

Mr Fatai Lawal

I think the highest point for anybody in the profession is the day you become qualified and people say you are now a chartered insurer. The day I got qualified, it was really a land mark in my life. I was very tender and young at that time and I didn’t even know what it meant, but I was just happy with myself. The highest point in my insurance career was when I was installed as the President of the Chartered Insurers of Nigeria (CIN). That was the highest level you could attain in a profession like this and was so happy and glad that I had the opportunity to lead the professional institute even though I decided to do just one term . It was very rear. Every other person that preceded me did two terms. I felt fulfilled and satisfied. I think what I was about to give within that one term was more than what I could have done if I had gone for a second term. And think that set a new standard in the institute and very happy about it.

Coming to the Insurance business, there seem to be a poor insurance culture in Nigeria, as an expert, how can this be rectified?

Yes! it was Winston Churchill that said that if he had the opportunity, he would put the word ‘insurance’ on every American door. And I wish that this new President would one day say, look let everybody go and take insurance. But the more people get insured and get compensated from insurance for loses that do happen. Today, people say somebody would always die so we must be prepared. One person say people would always die and another person say these ones will never die. If these ones would not die then who will die? Nobody will die. It will happen and it does happen. And when you have insurance industry that is encouraged, supported, and enabled by government you find out that most of the losses that are suffered that government had to pass on a huge part of the resources of the nation to compensate victims of war, to go and support people who cannot make life, will be reserved for others. So feel it would be more dependent on government in encouraging and providing an enabling environment for insurance to thrive in this part of the world. Here we say insurance penetration is just about 1  per cent whereas in more developed, even in South Africa, is about 60 per cent. What makes the difference is that the economy is more sophisticated. There is a growth of the middle class, there is a dependence on credit, and there is proper record of individuals. Those are the things that help insurance. Where there is a high level of middle class who are prosperous – I would always say it, if people cannot eat, they cannot buy insurance. If people have not been paid their salaries for eight months as it is in some States, how would they pay for insurance? We need to have economic prosperity for insurance to thrive.

Could you give us more insight into what you mean by enabling environment?

I have just said it. Creating an enabling environment means providing an environment that offer prosperity. Providing employment opportunities for people provide infrastructure that would enable small and medium enterprises to do their jobs and make money. When people are prosperous, they buy assets. When they buy asset, they would value their asset and they would be able to insure. When people are comfortable, they would not just want to die; they would not see any trouble on the road and insist that they must cross.  They would value their lives.  The average person that would not value his life is the one that would join Boko Haram and decide to kill to his life. And that is what I meant by improving the economic power of the Nigerian people by the government. And when that is done, people would be able to patronise insurance.

How has your company been surviving amidst these inadequacies?

Not just this company, many of the companies in the industry have continued to survive on managing their meager income that they have effectively. The focus has been on the high end part of the industry -from what is called the industrial and commercial end of the industry. But the end that is not developed is the small and medium enterprises (SMEs) which is the bane of the economy and that is the area that insurance can grow more. But those international companies like Total, Mobil and the like already have worldwide insurance programmes and they always are required to insure….. These are the ones that are largely profitable. The SMEs are not.  That is why when there is a fire incidence in the market – you see everybody crying. Those ones at Alaba, Balogun market – some of them had ended up committing suicide because they lost their sources of livelihood. Some of them had permanent debt that they cannot pay and some of the goods in their warehouses were actually given to them on credit. So who bears the loss? It is the traders. And even if they start working for another 10 years, they would not be able to pay for those lose. So they would rather leave that area and go back to the village and some something else whereas if they had taken insurance they would have been able to depend on somebody to support them.

Still on Insurance, a school thought was of the notion that marketing life insurance is difficult in Nigeria. What do you think should be done?

The reason why it is difficult is that the people you want to sell to do not have the means. They cannot guarantee to pay the premium for a reasonable length of time. That is why I said if the nation becames more prosperous, more people will be able to afford basic livelihood and they would value their lives and they would insure.

Also, forget about religion because most people say that it is the Muslims that say if you die, it is form God, No! All of us are passive when it comes to death. Nobody would have his child killed by a vehicle and you want to pursue money from it. It is not part of our culture. Whereas abroad, I mean if you injure somebody, you have to pay. If you damage somebody’s property just next door because there is leakage from your water, the guy would not let you go, you have to pay. The third one is the legal system. Even when you genuinely want to pursue your right, the court system is such that it will frustrate you.

How has Starling Assurance brand been competing with other more established brands?

Essentially we have had this brand which has been created even before there is Sterling Bank. And we are not related to it in any way. And we are known for what we provide. We are known for the quality of the people that we have; not just in terms of the skill; we are known for the integrity of the people we have within the system.

More importantly, in insurance there are people when they tell you they would pay you tomorrow, you should expect that you will be paid. And that kind of thing is very important and I think these are the things that have kept us as an organisation. We are also backed by a board that is well established in commerce and industry. Our founding Chairman, Mr Bode Emmanuel is a Chartered Accountant with interest in different part of the Nigerian economy. That also helped to promote the organisation. We also have shareholders like Pa Akintola Williams, the legendary Accountant. That shows the kind of people behind the company.

As the MD, what vision do you have for the company say in the next five years?

I want to see this company grow beyond what it is now in the next five to ten years. The company has the resources, the people and the right image to be able to move forward. Our current location is to show that the company is here to stay; not the one that is in a rented place and can close up tomorrow.

Have you had a situation where the company is in conflict with a client over claims?

I have not had a situation like that. I have been here for eight years and I have not had a client take us to court for any reason. I mean we have tried to be responsive to our applications and we have paid for loses.

What are the challenges facing the insurance industry in Nigeria?

There are quite a number of them. One of the major ones is government policies. Today government says everybody must pay his premium before taking up an insurance cover, and government itself does not pick up insurance cover and that weakens the insurance industry. The second one is that the economy of the nation has to be improved upon which we have been talking about. The third one is about the poor image of the industry that people talk about. I say people talk about because in reality, it is not as poor as a lot of people see it. People say insurance doesn’t pay claims… In fact I listen to this traffic Radio recently. Out of the five people that participated in the programme, four of them said they actually had positive experiences from insurance. These are not people who were bribed to talk.  One said he had bought a car and the first week of using it he had a major accident and the insurance company came to his rescue and repaired the vehicle for him. If not for insurance, he may not be able to buy another car in his life. And we have quite a lot of testimonies.

But the unfortunate thing is that people say ‘oh my uncle said insurance doesn’t pay.’  But do you have an uncle now that says insurance doesn’t pay? The truth is that when people suffer loses; they want to win the sympathy of others. When they get compensation from insurance they would never tell anybody so that they can still keep that sympathy. These are the major challenges. I don’t see it as reality that insurance has problem. Today’s insurance company has been highly capitalised. They have the skills and lively workforce and they would meet the applications. If there are few ones that are not doing well, I think the regulators are in the best position to deal with those ones.

Today’s leadership of NICON actually is doing that. They have a bureau; if you have a complaint about any insurer, you report there.

What will you consider your major achievements as the President of the Chartered Insurers Of Nigeria (CIN)?

One of the major challenges of insurance is the lack of education and information. And I said that as President of the Institute, the easiest way to propagate insurance is to get more people to be knowledgeable about insurance. Within the first 100 days of assuming the presidency, I embarked on preparation of a text book titled ‘Insurance for Secondary Schools’ because insurance has been approved a course of study for secondary school students. And the students need to be guided in the study of insurance for WAEC. As an Institute, you should be the custodian of knowledge about insurance.

Tell us a bit about yourself?

My name is Fatai Kayode Lawal. Most of my peers simply call me FK Making it easier for everybody do describe me.  I am the managing director of Sterling Assurance Nigeria Ltd. I have been in this position since the consolidation exercise of the industry since 2007. Prior to that time I was the managing director  of Universe insurance company which was one of the merging partners with Sterling Assurance ltd. Sterling Assurance actually became a merger of Universe Insurance, Sterling Assurance and New line Insurance; and these three companies came together during the consolidation exercise to form what is now Sterling Assurance. I have been saddled with the responsibility of managing this company since 2007.